Jobs or Social Services

June 05, 1995

Can you revive a decaying inner-city economy? The Clinton administration is betting $100 million in Baltimore and five other cities that proposals for reinvigorating stagnating neighborhoods will yield economic benefits. But already, decisions about how Baltimore's empowerment zone money will be spent reflect the familiar argument between those who want to focus on social services and those who want to direct precious dollars into job creation.

Last week, the board overseeing Baltimore's empowerment zone approved $6.4 million to pay for 1,200 drug treatment slots and day care subsidies for 360 children. At least one board member pointedly objected, believing that the only way to turn the empowerment money into a bonanza for Baltimore is to focus tightly on job creation. We agree.

Inner city neighborhoods need social services. But the best social service program is a job. In today's context of shrinking government, $100 million spent on social services will vanish in a wink of the eye. Only by creating jobs in businesses that can thrive in an urban setting will this money have lasting impact.

An analysis of economic prospects in inner cities in the current issue of Harvard Business Review casts light on both the failures of previous efforts in inner-city renewal and on the untapped potential of these neighborhoods. Michael E. Porter argues the only way to create a sustainable economic base in the inner cities is the same way the economy thrives in other places -- through private initiatives and investments based not on artificial inducements or charity but on economic self-interest and competitive advantage. He argues this can be done: Recognize the advantages the inner city has, whether it is the strategic location a wholesale distributor might prize or the population density attractive to a retailer.

Government can help in a number of ways, such as streamlining regulations that hamper business development or providing security for inner-city businesses. What doesn't work well are efforts that create an artificial business environment, isolated from the surrounding economy.

There's an old saying that the best way to help a hungry man is not to give him a fish, but rather to give him a fishing pole and teach him how to fish. Baltimore's empowerment-zone windfall is a drop in the bucket in terms of the vast human needs in this city. This money can never treat every addict, nor rehab enough houses to turn a city around. What it may be able to do -- with enough vision, talent and determination -- is to put in place strategies that can make needy neighborhoods places where entrepreneurs and established businesses can thrive.